Seaside tourism real estate's growth relies mainly on domestic tourists

Michael said that initally the target for domestic tourists for 2017 was set at 66 million but by the end of the year, the country had served 74 million domestic visitors, exceeding the target set.

In particular, in the period of 2016-2017, the total number of tourists in Vietnam had increased by 19 per cent, from 72 million visitors to 86 visitors. Of which, international tourists increased by 29 per cent and domestic tourists increased by 18 per cent.

Additionally, while international visitors only reached 13 million in 2017, domestic visitors reached over 73 million, which is double the figure in 2013. 

According to Duong Mai Lan, Director of Ascend Travel, travelling has become a necessity, even a habit for Vietnamese over the last few years. Nowadays, people travel whenever they can, not just with their families, their friends but also their companies, making the tourism demand increases significantly.

In addition, tourists’ tastes also change tremendously as a result of the economic development. 

In particular, the middle class and the rich increase constantly, which explains why more and more people choose to stay at 4-star and 5-star hotels with more facilities, instead of staying at 3-star hotels like before.

Grant Thornton's research also showed that 2016 was the third consecutive year that domestic visitors were staying at high-end hotels. Based on the report of Grant Thornton on hotel services, the occupancy rate for 5-star hotels in 2017 reached 75.2 per cent and the occupancy rate for 4-star hotels segment reached 72.2 per cent in 2017.

Seeing the market opportunity, many real estate investors have poured large amount of funds in this market. The market has now changed significantly with the appearance of condotel and resort villa. These segments are well concerned by investors due to its high liquidity.

According to Realtor Vietnam, the supply of condotel in Khanh Hoa province in 2017 reached 11,872 units with the absorption rate of 7,198 transactions, accounting for nearly for two-thirds of the market's supply.

Savills Vietnam also shared the concern of real estate oversupply especially with condotel in some localities boosting tourism. Based on the estimation of Savills Vietnam, condotel currently accounts for roundly 65 per cent of future supply in major tourist market until 2020 and accounts for 25 per cent of total hotel supply at present.

With such large supply, there are concerns over not only the possibility of oversupply of tourism real estate in the first half of 2018 but also in terms of the number of tourists required to fill these new lodgings in the future.

The prospect of Vietnam’s tourism in the future will not only depend on the growth of international tourists but also domestic tourists.